Correlation Between Third Harmonic and Sensei Biotherapeutics

Can any of the company-specific risk be diversified away by investing in both Third Harmonic and Sensei Biotherapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Third Harmonic and Sensei Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Third Harmonic Bio and Sensei Biotherapeutics, you can compare the effects of market volatilities on Third Harmonic and Sensei Biotherapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Third Harmonic with a short position of Sensei Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Harmonic and Sensei Biotherapeutics.

Diversification Opportunities for Third Harmonic and Sensei Biotherapeutics

0.15

Correlation Coefficient

Third Harmonic  Sensei Biotherapeutics

Average diversification

The 3 months correlation between Third and Sensei is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Third Harmonic Bio and Sensei Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensei Biotherapeutics and Third Harmonic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Third Harmonic Bio are associated (or correlated) with Sensei Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensei Biotherapeutics has no effect on the direction of Third Harmonic i.e., Third Harmonic and Sensei Biotherapeutics go up and down completely randomly.

Pair Corralation between Third Harmonic and Sensei Biotherapeutics

Given the investment horizon of 90 days Third Harmonic Bio is expected to under-perform the Sensei Biotherapeutics. In addition to that, Third Harmonic is 1.8 times more volatile than Sensei Biotherapeutics. It trades about -0.28 of its total potential returns per unit of risk. Sensei Biotherapeutics is currently generating about -0.06 per unit of volatility. If you would invest  54.00  in Sensei Biotherapeutics on November 29, 2024 and sell it today you would lose (9.00) from holding Sensei Biotherapeutics or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Third Harmonic Bio  vs.  Sensei Biotherapeutics

Third Harmonic Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Third Harmonic Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sensei Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sensei Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Third Harmonic and Sensei Biotherapeutics

The main advantage of trading using opposite Third Harmonic and Sensei Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Harmonic position performs unexpectedly, Sensei Biotherapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sensei Biotherapeutics will offset losses from the drop in Sensei Biotherapeutics' long position.

The idea behind Third Harmonic Bio and Sensei Biotherapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.